SB 165-ALCO. BEV. CONT. BOARD; MINORS; ALCOHOL  1:56:42 PM CHAIR MCGUIRE announced the consideration of SB 165. She noted this is the second hearing and the committee substitute, version W, is before the committee. 1:57:03 PM SENATOR MICCICHE moved Amendment 1, labeled 29-LS1384\W.1. AMENDMENT 1 OFFERED IN THE SENATE TO: CSSB 165(L&C) Page 5, line 1, following "completion of": Insert "(1)" Page 5, line 2: Following the first occurrence of "program": Delete "," Insert "or" Following the second occurrence of "program": Delete ", or a community diversion panel" Page 5, line 4, following "AS 47.37": Insert "; or (2) a community diversion panel" Page 5, line 18: Following "completion of": Insert "(1)" Following "program": Delete "," Insert "or" Page 5, line 19, following "program": Delete ", or a community diversion panel" Page 5, line 20, following "AS 47.37": Insert "; or (2) a community diversion panel" Page 6, line 14: Delete "selected by the court to serve" Insert "serving" CHAIR MCGUIRE objected for an explanation. 1:57:21 PM CHUCK KOPP Staff, Senator Peter Micciche, Alaska State Legislature, explained that Amendment 1 for SB 165 distinguishes between the Alcohol Safety Action Program (ASAP) and the Juvenile Safety Action Program (JSAP) that are approved by the Department of Health and Social Services (DHSS) and community diversion panels that are used by tribal circles and youth courts. These are the treatment options a person has for getting a fine reduced from $500 to $50. 2:01:49 PM CHAIR MCGUIRE removed her objection and Amendment 1 was adopted. CHAIR MCGUIRE opened public testimony. 2:02:34 PM KIRSTEN MYLES, Director, Cook Inlet CHARR, testified in opposition to SB 165. She expressed concern that SB 165 will do away with the balanced decision-making of the current Alcoholic Beverage Control (ABC) Board and turn it into a group with an anti-alcohol agenda. As currently written, the potential is great that three of the five board members will have backgrounds from rural, public safety, and health and social services, all of which are traditionally anti-alcohol. A board with this perspective could differ greatly from the interpretation of business that recognizes the economic and social benefits of the hospitality industry. She urged the committee to hold SB 165. 2:04:00 PM DALE FOX, President and CEO, Alaska CHARR, testified in opposition to SB 165. He stated that the board and government affairs committee voted unanimously to oppose SB 165. He said he attended the meetings in good faith for three years and consensus was not reached in the committee process. Claims to the contrary are simply not true. Research on other boards in Alaska shows they are made up of a majority of industry members with a few public members. As currently drafted, the composition of the ABC Board will be anti-alcohol, which will not lend itself to a reasonably regulated industry. He reiterated that Alaska CHARR does not support SB 165 and doesn't believe the industry supports it. 2:06:39 PM SENATOR WIELECHOWSKI joined the committee. ELIZABETH RIPLEY, Executive Director, Mat-Su Health Foundation, testified in support of SB 165. She reported that that Mat-Su Health Foundation conducted a community health needs assessment in 2013 and alcohol and substance abuse was ranked as the number one health issue. When asked, the local police captains reinforced that alcohol was the number one problem. She related that the foundation is a funding partner of Recover Alaska, which aims to reduce the harm done by alcohol throughout the state by employing environmental strategies. This includes uniform enforcement which SB 165 provides for minor consuming. They also support the change in composition of the ABC Board. She pointed out that alcohol isn't an ordinary commodity; it brings in revenue but it has enormous costs associated with its use. She highlighted that Alaska is the only state that has given the alcohol industry such a prominent voice on its regulatory board, and insisted that the board instead needs to more fairly represent the interests of all Alaskans. This can be accomplished by designating seats for public safety and public health and ensuring that they clearly outnumber industry seats. She urged the committee to pass SB 165. CHAIR MCGUIRE asked for an example of the laws that she hopes to change as a result of the change in composition of the board. MS. RIPLEY clarified that the foundation is not advocating for policies that eliminate the sale of alcohol but would advocate for higher alcohol taxes and policies that restrict the density of alcohol outlets, create an environment where youth are prevented from having access to alcohol and where they see social norms that do not promote heavy use and abuse of alcohol. 2:10:33 PM KATIE KRAMARSYCK, Juneau Youth Services (JYS), testified in support of SB 165. She informed the committee that JYS provides outpatient substance abuse treatment to youth. She said JYS supports the new composition of the ABC Board. The hope is that it will provide a more balanced representation from community members and be more consistent with the new Marijuana Control Board. JYS also supports the change in the minor consuming law from a class A misdemeanor to a violation with a $500 fine. The existing minor consuming laws are enforced inconsistently and have led to few referrals for treatment. The hope is that changing to a $500 citation will lead to better enforcement and more referrals for treatment. JYS also supports reducing the fine to $50 upon proof of participation in ASAP, JSAP or community treatment programs because it provides excellent incentive for youth to go to treatment. 2:13:22 PM JACK MANNING, President, Juneau CHARR and owner of the Duck Creek Market, testified in opposition to SB 165. He stated that CHARR doesn't object to the youth portion of SB 165, but he doesn't understand the urgency of pulling the composition of the ABC Board out of the original SB 99. He questioned whether the board would function properly and result in litigation because the people wouldn't have business backgrounds. The 1,800 liquor license holders in the state ought to be made aware of these changes and be factored into the formula of the makeup of the board, he said. CHAIR MCGUIRE said she, too, was concerned about the board composition and didn't necessarily support it, but it's part of a package that has good provisions for young people. She asked if he anticipates similar problems as those that occurred when the Murkowski Administration put the board under the Department of Public Safety. It became an agenda-driven mission to perform stings and she and Senator Meyer felt compelled to sponsor legislation to move the agency back to DCCED. MR. MANNING said DPS at the time focused its enforcement efforts entirely on alcohol licenses and doing stings. Nothing was spent on any other prevention methods despite the fact that the most common way for youth to access alcohol is at home. He related that during that time he could go to court and get $1,000 from a minor who came into his store and tried to buy alcohol. He always thought it would be better to give the youth a choice of going to court or going to a school assembly to talk about minor consuming from their personal perspective. CHAIR MCGUIRE said her concern about changing the makeup of the board is that rural, health, or public safety representatives may come in with an agenda. 2:23:28 PM PAUL THOMAS, Treasurer, Juneau Lynn Canal CHARR and owner of the Alaska Cache Liquor, testified in opposition to SB 165. He said he was a member of two of the ABC committees that have been working on Title 4 since 2012, and he believes the bill is a step backwards and will have the effect of damaging the cooperative environment that the industry and board have been building. The diverse group working under the ABC steering committee did talk about the composition of the board, but this concept was not considered and would not have been supported. The current composition works well and should not be changed. He urged the committee to hold the bill and instead pass the complete package that reflects the cooperative work from stakeholders and the board. 2:26:12 PM LEEANN THOMAS, CHARR member and owner of the Triangle Club Bar, testified in opposition to SB 165. She said that for two years she actively participated in the Title 4 rewrite and is totally against pulling elements from that comprehensive legislation and placing it in a separate bill. She emphasized the advantage of bringing Title 4 forward in one piece to ensure that it works together. She pointed out that it doesn't work now because of the piecemeal approach. In particular, she objected to the composition of the board. She said two industry seats is insufficient, and that number could potentially drop to one. She maintained that the non-industry members would not be knowledgeable enough to make decisions about licenses. 2:30:40 PM JEFF JESSEE, Chief Executive Officer, Alaska Mental Health Trust Authority, expressed dismay at some of the testimony he'd heard today on SB 165. He directed attention to the letter in the packets from the co-chair of the Title 4 revision committee that clearly sets out that the composition of the board was discussed and consensus was gained on adding public health and public safety seats to the board. To claim otherwise is simply not true, he said. He also stated that the argument that professional licensing boards are primarily made up of members of that profession is irrelevant because the ABC Board is regulatory and not a professional licensing board. Just as it wouldn't be appropriate to weight the Oil and Gas Commission with members from the oil and gas industry, it isn't appropriate for a majority of the ABC Board to be actively engaged in the industry that is being regulated. He agreed with previous testimony that the current composition of the board that includes two members from the alcohol industry is unprecedented nationwide. He said he'd be happy to discuss, in public meetings or with members separately, the kinds of problems that have occurred because of the industry domination of this board. CHAIR MCGUIRE requested he give examples for the record. MR. JESSEE said one example is that the ABC Board devised a scheme that allowed a Fairbanks bar to continue to operate after it failed to renew its liquor license. The ABC Board issued a second bar week-long catering permits that allowed it to cater the operations of the first bar whose license had lapsed. This went on week after week. Manipulation of a recreational site license provides a second example. That statute clearly states that those licenses are for seasonal events that allow the sale of beer and wine an hour before and an hour after the event. It is used for events like baseball and hockey games. A billiards parlor applied for and received a recreational site license, and the justification was that people play pool. Other billiards parlors then applied for licenses so they wouldn't be at a competitive disadvantage. At some point, the Alaska Club received a recreational site license that allowed the sale of beer and wine during operating hours seven days a week. There was no event, no season, and had nothing to do with a recreational site as envisioned by the legislature. The board expanded this license type so far that even CHARR eventually objected saying it had the potential to diminish their licenses. MR. JESSEE said the forgoing examples are exactly why public health and public safety should be represented on the ABC Board. That voice needs to be heard consistently so other agencies don't need to constantly birddog the board's activity and interpretation of the statutes. The legislature recognized the importance of public health and safety when it formed the marijuana board and it's just as appropriate for this board, he said. 2:37:29 PM ELLEN GANLEY, Vice Chair, ABC Board, related that she serves as a public member of the board and has a public health background. She fully supports the changes to the composition of the board, and believes that it gives an opportunity to bring in voices that represent other constituencies. She also stated support for the changes to the minor consuming statutes, because issuing tickets as opposed to misdemeanors will help identify the scope of the problem in the state. 2:39:22 PM CHYSTAL SCHOENROCK, Business owner, Forelands Bar, and CHARR member, testified in opposition to SB 165. She questioned whether the bill wasn't a backdoor approach to return oversight of the ABC Board to the Department of Public Safety. She stressed that there is no reason to change a fair system that has worked for many years. 2:40:29 PM LARRY HACKENMILLER, representing himself, testified in opposition to SB 165. He said the concerns Mr. Jessee expressed have been addressed in three years of regulation writing. He continued to say that contrary it the sponsor's remarks and Mr. Klein's representation, the Alaska CHARR government affairs committee did not arrive at a consensus to change the makeup of the ABC Board. He said the existing composition of the board works and does allow for someone from the fields of public health and public safety to be appointed. This mandated change isn't warranted and the accompanying education component isn't called for in the statute. He also questioned the purpose of putting law enforcement on the board, because public safety concerns are not impaired by having two public members on the board. The changes to the minor consuming laws does cut some red tape but would be more appropriate in the comprehensive SB 91. Finally, he described the ABC Board as a licensing board that is appropriately housed under DCCED. 2:43:30 PM CHAIR MCGUIRE closed public testimony on SB 165. 2:43:48 PM At ease 2:48:02 PM CHAIR MCGUIRE reconvened the meeting and offered Conceptual Amendment 2 to SB 165. CONCEPTUAL AMENDMENT 2 OFFERED IN THE SENATE JUDICIARY COMMITTEE TO SB 165 AS 12.62.400(a) is amended by inserting a new paragraph (18) that reads: (18) a registration or license to operate a  marijuana establishment 31 under AS 17.38. AS 17.38.200(a) is amended to read: (a) Each application or renewal application for a registration to operate a marijuana establishment shall be submitted to the board. A renewal application may be submitted up to 90 days before [PRIOR TO} THE EXPIRATION OF THE MARIJUANA ESTABLISHMENT'S REGISTRATION. When filing an application under this  subsection, the applicant shall submit the applicant's  fingerprints and the fees required by the Department  of Public Safety under AS 12.62.160 for criminal  justice information and a national criminal history  record check. The board shall forward the fingerprints  and fees to the Department of Public Safety to obtain  a report of criminal justice information under AS  12.62 and a national criminal history record check  under AS 12.62.400. SENATOR COGHILL objected for an explanation. CHAIR MCGUIRE explained that the bill that gave the Marijuana Control Board the authority to issue licenses, included a requirement that all applicants submit to a criminal background check. This was to ensure that licenses are not issued to felons. In an oversight, the bill didn't give the Department of Commerce, Community and Economic Development (DCCED) the specific statutory authority to request a national criminal history record check. She said she is offering the amendment conceptually so the drafter can comport it to SB 165. 2:49:31 PM SENATOR COGHILL removed his objection. SENATOR WIELECHOWSKI highlighted a clerical error in the new paragraph (18). 2:49:55 PM At ease 2:50:48 PM CHAIR MCGUIRE reconvened the meeting and asked Senator Wielechowski to offer an amendment to Conceptual Amendment 2. SENATOR WIELECHOWSKI moved to strike the number "31" in the new paragraph 18. [It appears between the words "establishment" and "under".] CHAIR MCGUIRE found no objection and announced that Conceptual Amendment 2, as amended, is adopted. 2:51:50 PM SENATOR MICCICHE spoke of the testimony he heard today and clarified that he does not support moving the ABC Board back to the Department of Public Safety and he does have documents that clearly show what CHARR agreed to. He said his perspective is that after a great number of steering committee meetings that included the industry, they had a bill that was ready and at the last moment CHARR indicated it wasn't ready. Because of that he introduced SB 165 that includes two things that everybody had agreed on. He read excerpts from steering committee minutes on 10/5/15 regarding composition of the board and a letter from the CHARR government affairs committee dated 1/22/16. In that letter, CHARR said: Alternatively, the industry committee suggests that the composition of the ABC Board and the minor consuming sections could remain intact if we added a section to reduce the class A misdemeanors for licensees in Title 4 to violations with language approved by both the steering committee and the CHARR government affairs committee. SENATOR MICCICHE emphasized that the Title 4 rewrite effort will continue and the remainder of the original bill will deliver the results that CHARR wants. But the provisions in SB 165 were agreed upon and it's appropriate to make those changes now, this legislative session. He reiterated support for the alcohol industry as an important part of Alaska's economy and again emphasized that the bill does not have a hidden agenda and the industry should not be blamed for the social ills associated with over-consumption of alcohol. The bill is an effort to help the industry partner with communities to attain a healthier Alaska. CHAIR MCGUIRE offered her understanding that work would continue on the larger rewrite of Title 4. 2:57:45 PM SENATOR WIELECHOWSKI said he supports a lot of things in the bill, but it's moving a little fast. The bill was heard previously in Senate Labor and Commerce but there is only one day of published minutes available. On Monday the bill received a quick introduction and 23 people were signed up to testify. Today the hearing has lasted just 45 minutes to an hour. He noted there is no other committee of referral and he'd feel more comfortable if there was more time to study it before reporting it out. SENATOR COSTELLO, speaking as Chair of the Senate Labor and Commerce Committee, clarified that every bill that is referred to that committee receives at least two hearings and all the public comment. CHAIR MCGUIRE said her inclination is to move the bill today, but she would take additional amendments. 2:59:18 PM At ease 3:00:10 PM CHAIR MCGUIRE reconvened the meeting and solicited a motion. 3:00:18 PM SENATOR COGHILL moved to report the CS for SB 165, as amended, from committee with individual recommendations and attached zero fiscal note. SENATOR WIELECHOWSKI objected. CHAIR MCGUIRE asked for a roll call. A roll call vote was taken. Senators Coghill, Costello, Micciche, and McGuire voted in favor of the motion to move SB 165 from committee and Senator Wielechowski voted against it. Therefore, by a vote of 4:1 CSSB 165(JUD) was reported from the Senate Judiciary Standing Committee. 3:01:05 PM SENATOR MICCICHE stated his intention to remain engaged and ensure that members who are appointed to the board do not have a record of opposing the industry.